The Delhi High Court on the 18th of this month in a judgment delivered by Justice Ravindra Bhat dismissing a writ petition filed by Bayer Corporation. Bayer Corporation sought to restrain the grant of a license under the Drugs and Cosmetics Act (henceforth referred to as Drugs Act) to Cipla for its drug “Soranib”. The landmark judgment also awarded costs amounting to Rs 6,75,000 which is payable in equal shares to the Union of India and Cipla. (There has been a previous post on the issue before the delivery of the judgment.)
The Petitioner (Bayer Corporation) argued that the drug “Soranib” for which license was sought was a “spurious drug” under Section 17B of the Drugs and Cosmetics Act. Bayer relied on Section 2 of the Drugs Act to contend that the legislative intent is to read the provisions of the Drugs Act in conformity with Section 48 of the Patents Act. Bayer attempted to bring in the concept of “patent linkage” by reading Section 2 of the Drugs Act and Section 48 of the Patents Act. Bayer also claimed that since the Drug Controller is aware of patent status of the drug (Section 18, Form 44, under Appendix 1 to Schedule Y of the Rules) granting of marketing approval would amount to contravention of Section 48 of the Patent Act. A distinction was sought to be made between a generic drug and a spurious drug by pointing out that “generic drugs can only be legally produced for drugs which are free of patent protection”. Bayer placed reliance on the judgments in the cases of Cattle Remedies and Anr. Vs. Licensing Authority/ Director of Ayurvedic and Unani Services (2007 (2) AWC 1093 and Hoechst Pharmaceuticals Vs. C.V.S. Mani, (ILR 1983 Delhi 548). Bayer also attempts to emphasize on its interpretation of Section 2 by pointing out that under Section 156, a patent granted under the Act has the same effect on the government as on others. And since the Drug Authority is a functionary of the Central Government, it should be equally bound by and respect the patent granted to Bayer.
Cipla however argued that the grant of a regulatory approval by the Drug Controller does not amount to infringement of the patent and that infringement needs to be established in a court of law in accordance with the provisions of the Patent Act. It cannot be assumed on the basis of statements of the patentee or decided by the Drug Authority which is institutionally incapable of delaying with complex issues relating to scope of the patent, its validity and infringement. Cipla pointed out that Section 107A of the Patents Act clearly exempts from patent infringement any of acts of making, using or even selling a patented invention, in so far as such acts are necessary to obtain information for the filing of a drug regulatory application before the Authority. Thus, it is rightly pointed out that the ‘Bolar provision’ or Section 107(a) would be rendered redundant if the approval by the Drug Authority amounts to infringement. Even with respect to a new application that potentially infringes an existing patent, the Controller can only direct that a reference to an earlier patent be made. In the absence of a specific statutory provision to that effect an authority like the Drugs Authority which lacks expertise cannot assess issues relating to infringement of a patent. Cipla also contended that Soranib cannot be a ‘spurious drug’ under Section 17(b) as Cipla was not trying to pass of its drug as that of Bayer’s. Reference was made to the different schemes of the Patent Act (and the existence of an exhaustive opposition and infringement proceedings) and the Drugs Act and the lack of a specific legislative provision providing for an overlap; essentially amounting to attempting backdoor entry of ‘patent linkage’. The Drugs Authority, which is publicly funded, cannot be used to further the enforcement of the private rights of a patentee. The Drug Authority has pointed out that it lacks the institutional expertise to deal with complex patent issues and the Indian Pharmaceutical Alliance supported the stand.
The Court began with an elucidation of the objectives and schemes of the Patents Act and the Drugs Act. It said that the enactments have distinct and disparate objectives. The Drugs Act prescribes standards of safety and manufacturing practices among other things. The Patents Act on the other hand, is not a regulatory law and serves to confer monopoly rights on inventors subject to the satisfaction of certain conditions. The Court said that accepting Bayer’s position would confer jurisdiction on one set of agencies denuding the powers, jurisdiction and meaningful role conferred lawfully on another set of specialized statutory authorities, under the Patents Act. The Court rightly emphasized on the point that the absence of specific legislative enactments in favour of patent linkage portrays the legislative intent to exclude it. If the Drugs Authority can decide on patent infringement, the provisions of the Patent Act would be reduced to “useless lumber”.
The Court, most importantly made a reference to the European Union Competition Authority’s Preliminary Report on the Inquiry into the Pharmaceutical Sector (The Final Report was presented on July 8, 2009). The report made a detailed inquiry into the reasons for delayed entry of generic versions into the market and highlighted the losses caused to consumers and governments owing to this. Patent linkage is unlawful in the EU. Bayer’s definition of ‘spurious drug’ would include every generic drug within its definition. Section 17-B was introduced to prevent adulterated drugs from flooding the market.
The Court points out that the following undesirable results which would follow owing to paten linkage:
(1) It clothes regulatory authorities, which are executive bodies solely concerned with scientific quality, efficacy and safety issues, with completely new powers, and into areas lack in expertise, i.e. patent rights policing.
(2) It transforms patent rights which are private property rights that depend on the owners’ promptitude and desire to enforce them, into public rights, whose enforcement is dependent on statutory authorities, who are publicly funded.
(3) Such linkage potentially undermines the “Bolar/Early Working” exception that encourages quick access to the post patent markets for generic medicines. This is a major public policy consideration in India, which faces a host of public health challenges.
(4) Article 27 of TRIPS requires that patents are made available without discrimination by field of technology. As the patent linkage system is not available outside of the pharmaceutical sector, or in the US, even for biologic products, extending it, as is sought, would potentially violate Article 27, without any debate, or mandate of law.
Delayed generic entry will detrimentally affect consumers and governments (in the form of increased spending on health). A system which permits patent linkage is detrimental to immediate generic entry and the interests of generic manufacturers for the following reasons:
(i) It effectively amounts to extension of the patent period of the drug as generic drug manufacturers can begin the proceedings to obtain license only after the expiry of the patent period.
(ii) It can lead to multiple proceedings against the generic manufacturer. This will to wasted time and resources in litigation.
(iii) The system breeds uncertainty with respect to the legal status of the drug.
(iv) Including ‘generic drugs’ under the definition of ‘spurious drugs’ will lead to bolstering the misinformation campaign of branded drug manufacturers against generic drugs.
In this context, the Court is moving in the right direction by awarding damages amounting to Rs.6,75,000 that might serve to deter ‘vexatious and luxury’ litigation by branded drug manufacturers. The Court condemned the petition in strong words as “speculative foray; an attempt to ‘tweak’ public policies through court mandated regimes.” Even if the final outcome of the litigation is ultimately in favour of the generic manufacturer, the branded manufacturers gain in terms of the delay in the introduction of the generic drug, the increased uncertainty and draining of the resources of the generic company. The only way this can be prevented is through the awarding of damages that come close to covering the actual costs incurred by the generic manufacturer in litigation.